Jump to content

Refund of employee's post-tax contribution at death


Recommended Posts

A governmental plan requires employees to contribute to the Plan post tax.  The monthly benefit reflects both the taxable and non-taxable portions and are reported appropriately.

 If a retiree dies before receiving benefits equal to his or her contributions (plus interest at the plan's rate), then his or her beneficiary receives a refund equal to the difference between the total benefit received and the retiree's post-tax contributions (plus interest).  Is this refund taxable?  How is the refund reported to the beneficiary?

Link to post
Share on other sites

You need to look at the Section 72 regs. I would expect that if there is a lump sum refund of contributions on death, then the remaining basis is all recovered (i.e., sum of all post-tax contributions, minus amounts previously recovered under Section 72). But I can't quote you the provision. Again, it should be in the Section 72 regs.

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
×
×
  • Create New...